Looking Back

While 2021 was troublesome for many sectors, cannabis was not one of them. New legal states, facility expansion, acquisition, legislation, mergers, money. The flow of activity in the U.S. was rampant featuring 209 deals totaling over $10 Billion – more than occurred in 2019 and 2020 combined (source:  MjBizDaily.com)!   

That said, growth slowed in many states. California, the country’s largest market, remains a problem due to illicit sales and high taxes forcing many dispensaries to go under and wholesale prices to drop. Even with California’s struggles, the West Coast (CA, CO, NV, OR, WA) still enjoyed 15.9% growth (source:  Forbes 12/31/21). Nationally, legal recreational cannabis sales ended the year near $15B – up 28% vs. YAG (source:  Statista.com). Not bad for an off year.  

2022 will surpass all that! With more states coming online, especially the large Northeast markets (NY, NJ, PA, VA), growth will be massive and could top $30 Billion (source:  MJBizDaily.com).  

What About Lighting?

According to Market Research Future (MRFR), the Horticulture Lighting Market will reach $7.9 Billion by 2026 – a CAGR that exceeds 16% — with LED solutions leading the way. While the most-common facility type remains greenhouses, the vertical market is growing at a faster rate. The 2020 global vertical farming market was valued at $5.5 Billion (USD) and projected to reach $20 Billion in 2026 (a CAGR of 24.3% from ’21 – ’26). This is due to declining arable land and the need to support a growing population moving into more urban areas. 

Vertical growth is also driven by advantages over conventional farming (perfect growing conditions), advancement in LED technology, demand for more organics, and higher food safety assurance. North America is expected to dominate vertical farming with small to medium-scale companies leading the way (source: Researchandmarkets.com). Greenhouses are still the present, but vertical farming is the future.

Controlled Environment Agriculture (CEA) will reap the rewards of many tailwinds. How can you take advantage?

  • Stay current on the category, technology, terminology. Just like your traditional lighting customers, most rely on outside information to stay current. You must offer insights using the jargon and metrics that drives their business.  Just showing up with a product to sell won’t cut it.
  • Consider academic targets. If agriculture is important to your state, then it’s important to your state institutions.  Professors of Horticulture have very different equipment needs and requisition processes than the main campus.  Also remember that state universities cannot yet study cannabis (Federal prohibition means they lose Federal funding should they try). But they can study hemp and take that learning to cannabis facilities upon graduation.
  • Think beyond lighting. This is a technology play with new discoveries and applications happening all the time.  Learn about controllers and sensors. Learn about energy efficiency and microgrids. Learn about commercial hydroponics.

Get ready for a big year.